The open standards based internet telephony service Gizmo Project made a drastic move today by dropping the cost to zero for all calls to any phone owned by a Gizmo user in 60 countries, permanently. It’s not quite free calls to everyone everywhere, but it’s a big move away from the standard revenue model of charging for all calls to land lines and mobiles. Both parties on the call will need to have logged into and used a Gizmo account recently enough to be considered active.
Gizmo was founded just 13 months ago by a team that includes Michael Robertson, the founder of SIPphone, MP3.com, AjaxLaunch and a variety of other projects.
Additional features that Gizmo has offered for some time include very nice one-click recording, $3/month call-in telephone numbers in 50 US and UK cities and a partnership with FreeConferenceCall.com. The use of open standards means that Gizmo is not a siloed service and can make calls across any other VOIP network that participates.
It’s been an incredibly compelling service for some time, only lacking the huge user base that Skype has. I use it to record calls and would use it all the time if other people did. As Skype languishes in a post-acquisition eBay abyss, today’s announcement will likely move Gizmo into a much better position in terms of number of users.
What does this mean for the industry? If calls continue moving towards free, then it’s going to be all about the value-added features. Video, better conferencing support, SMS – I can only imagine what sorts of features VOIP providers will be able to find substantial profit in. Perhaps these consumer VOIP services will have to make consumer VOIP a loss leader in exchange for building the strength of enterprise VOIP offerings. Ad supported free calls could be acceptable if the ads appear on the web interface. It’s hard to say what could take the place of burning through VOIP-out minutes, but interesting things will likely emerge.
Most likely this free VOIP future is still a ways off. Most paid calls out of the system are probably made to land lines owned by people who never use Gizmo or any other VOIP service. This greatly mitigates the impact of today’s announcement and you could almost call it little more than a cynical marketing move. As a proof of concept, though, it shows that VOIP to land and mobile numbers can be done for free. Skype does this intermitantly to land lines in different countries. We’ll have to see if Gizmo’s approach finds traction and builds its user base.
Fine print
The All Calls Free plan applies when both call participants are registered and active Gizmo Project users. A person is considered active when they are making phone calls with Gizmo Project on a regular basis. We reserve the right to limit call length. In countries where free phone calls are not available, when calling a non-free number in an All Calls Free-listed country, or when calling a non-Gizmo Project user, calls are subject to our regular low rates.
Yes, that mitigates the impact of this announcement for sure. I’ll confess that the promise of free VOIP to land lines was shiny enough that my original post has required some revision.
What they’re doing is a good marketing strategy, not unlike MCI’s Friends & Family program from years ago. Download Gizmo, sign up, make free calls to people who’ve done the same. If everyone has Gizmo, they’ll be more likely to make the call directly via VoIP, which means lower average transport costs for Gizmo.
Gizmo doesn’t have the brand that Skype does, but it’s better in many respects. It’s an open system, so you can buy any SIP phone or ATA and register it with Gizmo. The Gizmo client can also be signed into any SIP compatible system or network, so you can make and receive calls using the Gizmo service and your company PBX at the same time. (I have my copy signed into Gizmo and my Broadvoice flat-rate plan).
The problem that all of these companies face is not the cost of carrying calls, but rather getting beyond the propellerhead set to average consumers. It will take several more years, but it will eventually happen when the consumer electronics manufacturers have learned how to make devices that people like and that work well with these networks.
Just wanted to point out the traffic difference between the two services.
http://www.alex...t.com+skype.com
It’s certainly a move to get Gizmo more “viral” – there is a good incentive to get the party you want to call sign up
Compared to other services like VoipStunt..etc, the biggie is the free calling of mobile number.. BUT the wording of the announcement is really tricky, talking about 60 countries. 60 for landlines, yes, but only 18 for mobile calls, and the 18 includes such populous destinations as The Vatican, San Marino, Saipan…etc.
Like Brian, I’m also impressed with this marketing strategy. There will be a lot of Gizmo users talking friends and family into using it.
I am wondering why they don’t just go all the way with it. This is a push in the right direction if they want to improve their user numbers but just think of the thrive if I could use it to call anyone, virtually anywhere on a landline for free. I know in the US you have SkypeOut free this year which I am sure will get lots more people into VOIP, but we have no such luck in the UK (or in fact anywhere else).
Gizmo Project is definitely fighting for a spot in the VOIP space. I wrote about Gizmo here
This marketing campaign will surely fail. It’s too complicated and requires too many steps for the user to actually get a free call, and users will see through it immediately.
Compare their offer to the simplicity of Skype’s offer: free calls to any US phone from any US Skype account. Period. Within a couple of days of that marketing launch, I noticed that the number of Skype users logged in at a given time was up about one million users, or 20%. That’s a pretty powerful marketing campaign.
VOIP is not a very profitable market. Look at Vonage; they spent more money on online advertising in the past two years than any other company and yet they have -82.48% profit margin and only 175.46M cash.
jajah.com has the same model, isn’t ?
wengo > gizmo > skype
only 175.46m in cash? I’d like some of that.
skype annoys me and when i first read this i was initially excited, but its starting to feel more like just a stunt. so when i make a call i dont know if i am active or not, so i have to wait till my phone call is over, cross my fingers, and then hope i dont get charged ??
basically their business plan is as thus. gizmo isnt as popular as skype and want to build their userbase (obviously). so reward the people who have already used the service by giving them free calls (they will determine the active\not active line) and hope that excitement leads to them telling everyone and their userbase increasing. so then their (hard)core user base percentage goes down as new users increase and they use that to gauge where the ‘active’ user line is. so if you are in the top say 25% based on activity your calls will be free but the new users will have to make a number of paid calls until their activity increases to that threshold. this is why they are saying the line is really low, because most the users have been around for awhile, but if their plan works and userbase takes off the line with go up with them. guess its better to hope your call might be free, than to know your paying for it (skype).
All –
The definition of active user is meant as a way to prevent abuse, not as a penalty for people who don’t use it enough. Surely if you signup for gizmo just to take advantage of this service and never use it again, we’ll never have a chance to offer your more services (or advertising) which you may or may not be interested in purchasing, so that’s really abuse.
If you’re a Gizmo user in good faith, you’ll never have to worry about not being active. Our intention clear. We want to push all calling to free. We are not trying to trick people into a program that will change substantially in the future.
I hope everyone chooses to take advantage of this program because it’s really great. It will help everyone save money and offers a set of services that you can’t get through your cell or landline.
Unfortunately, there are a few bad apples out there that we have to protect ourselves against.
Best,
Jason Droege
President
SIPphone, Inc.
I agree with JJ. This marketing gimmick is too complicated. A 100% failure.
Just a marketing move, useful just to increase the user base.
Here are my toughts.
http://lucafili...-calls-but.html
Luca
The need to increase the existing subscriber base is apparent from this , a smart move any ways. They need to go a long way and this is the right time to move in big given what Marshall rightly pointed out
“As Skype languishes in a post-acquisition eBay abyss, today’s announcement will likely move Gizmo into a much better position in terms of number of users”
I am not sure that this will have a strong impact, it is purely marketing as most of you pointed out.
The move is that phone operators will offer call to land lines for free. Right now in France, if you have as providers Free or Neuf Cegetel & others you can call for free from your landline to other landlines in Europe and NA. They are now combining this with ToIP services like phone forwarding to your computer (through a SIP program). Who is going to use such programs (on a computer) if you can have the same benefits with your regular phone or Wifi cellphone?
Quetzal, since Gizmo uses a standard SIP protocol, you don’t have to use a computer at all. You just need a VoIP router or phone convertor configured to use SIPPhone’s service.
Or you can use the Gizmo client software which IME is excellent.
I still have a hard time with the free call concept sustaining itself in that I see network operators moving to charge for network access for callers who are not subscribers. All major telcos in my opart of the world (Asia) are testing equipment that can pull voip voice packets out of the cloud and re-direct them to very low qos on the network or simply block them. Enterprise vopi is going to ride on the top of the bit stream, followed by subscription voip….free voip? Yes, it will be there, but the qos will be so low no one will use it…….